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Insurance vs Investment - Did You Get the Right Financial Plan?

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Insurance vs Investment - Did You Get the Right Financial Plan?
November 05, 2023

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In today’s day and age Insurance and Investment have become an integral part of one’s life. While it’s smart move and put a portion of what you’re earning today towards saving for your and your family’s future, many make the mistake of thinking Insurance and Investment means the same thing.

Further, there are many of us who think that investment or insurance plan that one has would also satisfy or be good for the other person.

In reality needs and capacity of each person and family is different and what might satisfy one person, might not satisfy other person or his/her family.

 One needs to align their immediate and long-term goals and then find and plan that suits their requirement and capacity the best.

What is Insurance?

Insurance is a financial service designed to protect individuals or families from various forms of loss. These losses can occur due to events such as the death of a loved one, damage to property, or health issues. What is insurance? It's essentially a safety net, offering coverage and peace of mind in times of uncertainty.

Biggest example for instance is car insurance which protects you from the financial havoc in case it gets badly damaged or worse stolen. Depending on the type of car insurance that you get, the insurance company covers the financial damage to the vehicle or replaces your car altogether in some cases.

In case of Life Insurance, the dependents get a single-sum income when the insured person passes away so as to provided them at least some financial help at the time of need, or provide them a lump sum amount once the term of the policy ends.

What is investing?

In case of Investment, it is the amount of money or assets that you give to a third party in exchange for the return of that money or assets along with profit at an agreed point in the future.

There are many kinds of Investment Plans, like Bonds, where you lend your money to a company or government, in return for an interest and stocks, where your stake equates to you being part owner of a business.

While Bonds are relatively safer purchase of stocks can earn you a larger profit and are high-risk where returns are not guaranteed.

There are also Mutual Funds where you invest in a mixture of stocks and bonds and is considered mid-risk with mid-returns.

So what to get: Insurance or Investment?

The answer is simple and boils down to what you need now and what you need in the future.

While Investments will take care of your now and immediate future, Insurance will take care of you and your loved ones in the long run.

Here are few Insurance plans that you can consider in case you are looking to invest in your and your family’s long term future.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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